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Fox Broadcasting Co. v. Dish Network, L.L.C.

IP/Entertainment Case Law Updates February 6, 2014

Ninth Circuit issues amended opinion affirming denial of plaintiff broadcasting companies’ motion for preliminary injunction against Dish Network over Dish Network’s network television recording product, finding that plaintiffs were not likely to succeed on their direct and indirect copyright infringement claims and breach of contract claims against Dish.

Plaintiffs Fox Broadcasting Co., Twentieth Century Fox Film Corp., and Fox Television Holdings, Inc. own the copyrights to broadcast television programs airing on the Fox television network. Defendant Dish Network is a distributor of broadcast television content that retransmits Fox broadcast content under various distribution agreements. Dish’s most recent agreement provides that Dish may provide Fox Video On Demand to Dish subscribers, so long as fast-forwarding functionality was disabled during advertisements.

In 2012, Dish introduced a new feature, PrimeTime Anytime, on its subscriber video recording device, the Hopper. PrimeTime Anytime allows a subscriber to quickly set the Hopper to record all prime-time television shows on each of the four broadcast television networks (although the user may disable prime-time recording of certain networks on certain days). Dish sets the start and end times of the PrimeTime Anytime recordings and sometimes changes the recording times. The subscriber may elect to have PrimeTime Anytime store prime-time recordings on the Hopper for up to eight days. During that time, the subscriber may elect to “save” individual shows, which saves another copy of the show to the Hopper after PrimeTime Anytime recordings expire.

Dish also introduced the “AutoHop” feature that allows subscribers to automatically skip commercials on shows recorded by PrimeTime Anytime. The start and end times of each commercial break are manually set by Dish employees. After setting the commercial break times, Dish uses “beta Hoppers” to make quality assurance copies of primetime content that remain at Dish’s facilities.

Fox sued Dish for copyright infringement and breach of contract, and sought a preliminary injunction. The district court denied the preliminary injunction, finding that Fox was not likely to succeed on the merits, and the Ninth Circuit affirmed. First, citing the Second Circuit’s decision in Cablevision, the court found that Fox was not likely to succeed on its direct copyright infringement claim because the user, and not Dish, makes the copy of the prime-time content. Although Dish’s quality assurance copies may infringe Fox’s copyrights or breach Dish’s contract with Fox, Fox failed to demonstrate irreparable harm from these test copies, or that any harm would come from subscribers’ use of the AutoHop itself.

Second, the court determined that Fox was not likely to succeed on its secondary copyright infringement claim. In order to establish secondary copyright infringement against Dish, Fox is required to demonstrate that Dish’s subscribers are primary copyright infringers. Dish argued that its subscribers’ copying of Fox content is a fair use because subscribers primarily record content for “time-shifting” purposes, viewing content at a time after it is broadcast. Fox argued that subscribers also use PrimeTime Anytime and AutoHop in order to skip commercials and to build libraries of copyrighted content. The court found, however, that because subscribers used the Hopper privately, for non-commercial purposes, that because the advertisement-skipping, rather than the recording of Fox content, contributed to any market harm, and that because advertisement-skipping itself does not implicate Fox’s copyright interest, Dish’s subscribers were entitled to a fair use defense.

Finally, the court determined that the district court did not abuse its discretion in finding that Fox was unlikely to succeed on its breach of contract claims. The Ninth Circuit ruled that the district court was justified in construing the terms of Dish’s contract in accordance with the Copyright Act. Although Dish’s contract specifically prohibited Dish from distributing Fox content as video-on-demand or similar programming and from offering fast-forwarding for approved video-on-demand services, the district court’s finding that PrimeTime Anytime was more akin to a DVR than a video-on-demand service was not deemed to be clearly erroneous.